Amid surging energy prices worldwide due to the Russia-Ukraine war and a deteriorating economy due to inflation and its depreciating currency, Pakistan is forced to spend 66% of its forex reserve on fuel imports.
Pakistan is currently spending approximately USD 21.43 billion annually on fuel imports, which is about 66% of its total foreign exchange reserves, according to The Express Tribune. Pakistan’s reliance on costly imported fuels continues to grow in parallel with the increasing energy needs, causing stagnation in the sector. Hence, the switch to or focus on indigenous resources is becoming a ‘must’ in order to meet the growing energy demands of the country.
The fuel cost per unit of energy generated from imported coal increased from Rs 20.17/kWh to Rs 29.12/kWh, while the per unit cost of energy generated from local Thar coal remained around Rs 4–4.5/kWh. This was revealed in the State of Industry Report 2022, recently issued by Nepra, as reported by The Express Tribune.
Notably, the coal-fired power plants in Pakistan import coal mainly from South Africa and Indonesia, and this imported coal alone has seen a significant price surge of late.
The delivered price of South African coal increased from USD 177 per tonne to USD 407 per tonne during the last year alone, reported The Express Tribune.
Keeping this in mind, the report added that a proposal to convert imported coal-based power plants already set up in the country to Thar coal is under consideration.
The report added that enhancing the share of electricity based on indigenous energy supplies is crucial to ensure energy security, self-reliance, affordability, sustainability, and a reduction in dependency on imported fuel-based generation.